Introduction

Founded on 8th May 1880, The Coca Cola Company, owner of the most iconic brand of Coca Cola, is the 2nd largest beverage manufacturer in the world. Head quartered in Atlanta, USA, it owns or license, and market more than 500 non-alcoholic beverage brands. However, out of all these, its four brands namely Coca-Cola, Diet Coke, Fanta, and Sprite are world leaders in non-alcoholic beverages, sold in more than 200 countries.

The Coca Cola Company makes its branded beverage products available to consumers throughout the world through its network of Company-owned or -controlled bottling and distribution operations as well as independent bottling partners, distributors, wholesalers and retailers — the world’s largest beverage distribution system. These products account for nearly 2 billion of the approximately 60 billion beverage servings of all types consumed worldwide every day.

Employing more than 86,200 employees, it had a market cap $218.25 Billion in October 2020 while it earned $37.27 Billion revenue in December 2019 with a net profit of $8.92 Billion.

SWOT A nalysis

Invented by Albert Humphrey of the Stanford University in 1960s, SWOT Analysis is a structured planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats of an organisation. Identifying the internal and external factors that are favourable and unfavourable to achieving the corporate objectives of a firm, the analysis helps the management to find out the strategic fit-the perfect route to achieve those objectives.

A. Strengths

Some of the characteristics of the business that give the Coca Cola Company an advantage over its competitors are as follows;-

A/1. Brand Recognition

The market leader in the soft drinks industry, Coca-Cola is one of the most renowned brands across the world. Be it your home, office, shops, hotels, bars or restaurants, Coca-Cola is everywhere. 94% of the world’s population recognizes the brand instantly by its red and white Coca-Cola logo . More than 10,000 soft drinks from Coca-Cola are consumed every second of every day on average. This brand recognition is one of its biggest strength as it saves a lot of its resources, financial and non-financial, for marketing its products.The company can influence consumers’ buying decisions through its brand power and massive marketing campaigns more easily than most of its smaller rivals.

A/2. Dominant M arket S hare

The Coca-Cola Company is the largest non-alcoholic beverage company in the world, serving around 2 billion or 3.2% of the total 60 billion beverage servings of all types consumed worldwide every day. The company owns, distributes and sells over 500 various non-alcoholic beverage brands in over 200 countries. Being large having global reach, and dominant market share has a few advantages over competitors:

Economies of scale. Economies of scale allow the company to share its fixed costs over hundreds of brands and billions of servings, making each drink as cheap as possible.Market power over suppliers and competitors. Due to its size, The Coca-Cola Company can exercise its market power over suppliers by requiring lower prices from them. The company can also use its size to affect the competition by underpricing some of its items, acquiring the smaller competitors or saturating the market with many of its own products.Wide audience reach. The Coca-Cola Company’s distribution network allows the chain to reach more customers than most of its rivals could reach.  Wide audience reach does not only help the company to target more customers and increase brand awareness, but also to introduce new products more easily.

A/3. Diversified P roduct P ortfolio

The Coca-Cola Company owns and distributes over 500 different brands, which is the most extensive beverage brand portfolio in the whole industry. The company offers beverages for every taste in 7 beverage categories such as carbonated soft drinks, bottled water, juices, sports drinks, tea & coffee etc. Although the most popular company’s drink is Coca-Cola, earning around 40% of the company’s total revenue, it is only one of the 21 billion-dollar brands that the business owns such as Fanta, Sprite, Diet Coke/Coca-Cola Light, Coca-Cola Zero, Minute Maid, Georgia Coffee etc. This diversified portfolio benefits the the company in several ways

The Coca Cola Company depends less on one or two of its beverages to generate the majority of its revenue.With so many beverage drinks in so many flavors, the business can satisfy every consumer’s needs and tastes.If the demand for one of the company’s beverages falls sharply (as it is now with Coca-Cola) the business can rely on other beverages to generate higher sales.Few of The Coca Cola Company’s rivals can enjoy such a diversified brand portfolio, which provides strong competitive advantage over the rivals.

A/4. Greatest C ustomer L oyalty

Coca-Cola is considered one of the US’s most emotionally-connected brands. This valuable brand is associated with ‘happiness’ and has strong customer loyalty. Customers can quickly identify their particular taste. Finding its substitutes is difficult for them. Moreover, Coca-Cola and Fanta have a huge fan following than other beverage names in the industry.

B. Weaknesses

On the other hand, some of the characteristics that place the Coca Cola Company at a disadvantage relative to its competitors are as follows;-

B/1. Limited Product diversification

As compared to its competitors, the Coca-Cola Company has low product diversification. Where Pepsi has launched many snacks items like Lays and Kurkure, Coca-Cola is lagging in this segment. It gives Pepsi leverage over Coca-Cola.

B/2. Health concerns

The industry has seen customers move towards the health drinks. However, this is an area where the brand presence of Coca Cola is relatively low. It also faced lawsuits over product quality recently. The uproar over the use of pesticides is yet to die. Continuing lawsuits and legal hassles also challenge its reputation especially in the growing markets.Carbonated drinks are one of the major sources of  sugar intake.  Coca-Cola is the biggest manufacturer of carbonated beverages. Many health experts have prohibited the use of these soft drinks. It is a controversial issue for the company. However, Coca-Cola hasn’t devised any health alternative or solution for this problem yet.

C. Opportunities

Opportunities, as the name implies, are the elements, external to the organisation, that could be exploited to its advantage by taking advantage of their potential to increase profits, productivity or benefit a business. Opportunities arise from PEST (political, economic, social and technological) environment. Some of the opportunities which can be beneficial for the Coca Cola Company in future are as follows;-

C/1. Increasing Population/Prosperity in Developing Countries

Population of the developing countries is increasing at a rapid rate along with the rise in the middle classes in these countries. Consequently, there is a rise in the demand for luxury goods and services; coca cola and its allied brands are included in these luxury items. Coca-Cola has the opportunity to introduce new offerings in these countries

C/2. Increasing Global Temperatures

Whether mad-made or natural, the looming threat of Climate Change and Global Warming is a God-send opportunity for the beverage manufacturers all the world. Rising temperatures mean high demand for soft drinks. Many regions with hot climate have the highest consumption for cold drinks. Thus, increasing presence in such locations can be excellent – Middle Eastern and African countries are a good example.

C/3. Technological innovations

Coca Cola’s business is entirely dependent upon logistics, transportation and supply chain, all needing massive amount of energy. With the decreased demand for oil and gas as a result of technological advancements in alternative renewable fuels, their prices are decreasing creating opportunities for cost reductions in all its operations.  

C/4. Water Scarcity

Water, particularly high-quality potable water, is steadily becoming a scarce commodity in majority of the countries. Coca-Cola owns several packaged drinking water brands like Kinley. There is a great potential for expansion in this segment for Coca-Cola. There is an opportunity to expand and bring more healthy drinks in the market to meet the growing demand of packaged water.

D. Threats

D/1. Decreasing Population in Developed Countries

With the rate of population growth declining in the Western countries, the scope of further rise in demand for the beverages is likely to squeeze in the developed countries

D/2. Trade War with China

There is growing tensions between China and the USA on several issues; trade imbalance between the two is the most contentious issue. And Coca Cola being the iconic brand of America is likely to suffer if China imposes ban on American products or the Chinese people start boycotting the American products

D/3. COVID-19 P andemic

The food and beverage sector has faced the worst brunt of the coronavirus so far right from the manufacturing and supply chain to their end use. Countrywide lockdowns have prevented employees from working in factories, severely impacting the supply chain, reducing the consumer footfalls, and reducing the purchasing power of the people to buy such luxury items. While the  general consensus is that this grim scenario might last until a treatment/vaccine for COVID-19 is found, it has been speculated that the aftermath of the pandemic is likely to remain for quite a period. 

D/4. Health Consciousness

Multiple studies have shown how consumers are becoming health conscious, considering their health to be a factor when choosing foods. Carbonated drinks are one of the major sources of  sugar intake which results in two grave health issues – obesity and diabetes. Coca-Cola being the biggest manufacturer of carbonated beverages is accused of major source of spread of these two health concerns.  Molson Coors have joined with Hydropothecary Corp to release a cannabis-infused non-alcoholic drink for Canadian markets. Blue Moon have announced a de-alcoholised cannabis-infused beer called Grainwave. The challenge for Coca Cola will be to take advantage of the innovation, and tap into the new seam of product development opportunities.

D/5. Traceab ility Issues

Consumers are also becoming  demanding about the traceability of the ingredients of the food and beverage they consume. The appeal here is reduced air miles, and a general sense of participation in a greener route from field to fork. McDonalds’ commitment to use only cage-free eggs by 2025 would soon become an example for other big brands in food and beverage industry to follow for the items they market. The challenge here is to be aware of consumer demands for clear information on the provenance of their food, and to make changes accordingly.

D/6. The ‘Plastic B an’

The eco-friendliness becoming the buzz word, excess consumption and improper disposal of plastic has come up as one of the major challenges faced by food and beverage managers today.  Food and beverage manufacturers and retailers are now striving toward making the food manufacturing process highly conducive to the environment through the adoption of numerous recycling practices. The deployment of green business practices – right from the production to the packaging and supply chain management is a crucial solution to tackling the current issues in the food industry.Greenpeace censured Coca-Cola in its published report in 2017 for its use of single-use plastic bottles.

It has also been criticized over its recycling and renewable sources. The Coca-Cola Company  was ranked the world’s No 1 plastic polluter by Break Free From Plastic in its annual audit, after its beverage bottles were the most frequently found discarded on beaches, rivers, parks and other litter sites in 51 of 55 nations surveyed. Last year it was the most frequently littered bottle in 37 countries, out of 51 surveyed. It was found to be worse than PepsiCo and Nestlé combined: Coca-Cola branding was found on 13,834 pieces of plastic, with PepsiCo branding on 5,155 and Nestlé branding on 8,633.

D/7. Water U sage C ontroversy

Another environment-related threat for a beverage manufacturer like Coca Cola should be the issue of waste management. Undeniably, the food industry generates a considerable amount of waste, right from sourcing the raw material to food retailing and distribution. The negative impact of the same has been identified as one of the most crucial environmental issues in food and beverage industry that needs to be dealt with as soon as possible. Coca-Cola has faced many criticisms over its water management issue. Many social and environmental groups have claimed that the company has a vast consumption of water in water-scarce regions. Besides, people have alleged that Coca-Cola is polluting water and mixing pesticides in water to clear contaminants.

D/8. Direct & I ndirect C ompetition

Although direct competition from Pepsi is clear in the market, however, there are many other companies which are indirectly competing with Coca-Cola. Starbucks, Costa Coffee, Tropicana, Lipton juices, and Nescafe, are the indirect competitors of Coca-Cola which can threaten its market position.

Recommendations

Based on the above SWOT analysis of Coca-Cola, we can conclude that Coca-Cola has a definitive market position in the soda industry. However, it is recommended to bring more innovative changes such as

Long term Strategy for Covid-19: This pandemic has changed the business environment in multiple ways. Firms are adopting new ways of doing business to meet the challenges posed by Covid-19. Coca Cola must innovate to retain its market position.Horizontal Diversification: So farCoca Cola has been successful in vertical diversification- launching more than 500 products in beverages. However, it is now time to bran into horizontally by launching products in food sector such as cereals, snacks, biscuits, etc.Focusing on Health-related Matters: It should bring some solution to address the rising health concerns from social activists.Improving its Water Management System: Coca Cola is already seized of this issue but its progress is slow and dealing with the criticisms from environmental agencies.Expanding into Developing Countries with Humid Temperatures: There are many products of Coca-Cola like Fuze Tea, Dasani and Hi-C which aren’t distributed in many developing countries. Coca-Cola needs to increase the distribution of such products.Sustainability and Green Marketing: It can improve its brand image in the market.In this scenario, a product that is tagged as ‘eco-friendly’, quite naturally, has more of a consumer connection and is likely to accrue lucrative sales than a product that is popularized to harm the environment.Last year, Nestle declared its decision to use 100% recyclable/reusable packaging by 2025. Additionally, retailers such as Asda, Café Coffee Day, and McDonald’s have also announced their commitment to go plastic-free and bring about sustainable practices in production and packaging.